Aerospace stocks are already up big, but these stocks should have even more room to run
Aviation and aerospace stocks have found themselves in some
crosswinds.
On the one hand, they’ve enjoyed an amazing run in recent
years. On the commercial side of the business, order activity has soared.
Airlines have gone on a spending spree. Thanks to plunging jet fuel prices,
airlines have earned unusually large profits and are taking advantage of the
windfall to modernize their fleets. That said, with the oil market on the mend,
commercial airlines are likely to see profits start to revert toward normal.
On the military side, Trump’s rise has been a positive for
the industry. Hardly a week goes by where Trump or Vice President Pence aren’t
talking about how much they love the military and the soldiers on Twitter.
Additionally, the more militant stance of the U.S. is causing other countries
to beef up their forces as well — Trump’s demands on NATO allies to increase
spending could bring in more orders, for example.
However, it’s hard to forecast how geopolitics will go in
the future.
Upcoming elections could greatly change the outlook for
defense spending. On the commercial side, airline profits are going to start
looking much worse if fuel prices stay where they are now. The sector has been
hot, but expect more modest returns going forward. Against that backdrop, what
aviation and aerospace stocks are still worth having on your watchlist?
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